What happens after Product Market Fit?

The next step for your startup's expansion

A lot of content and programs help startups craft minimum viable products (MVPs) to get to Product-Market-FIT, and that is also when Series A funding happens. However, many startups continue to do what they do at the Product-Market Fit stage, thinking that scaling is guaranteed with more resources funded from investments. This also explains why only 40% of funded startups reach Series "A" and only 20% reach Series "B".

Note: The term Product-Category Fit (PCF) will be used interchangeably with Product-Market Fit (PMF), given that most of the time, the market does not really exist yet. The term Go-To-Market Fit will be used interchangeably with Go-To-Segments Fit.

Achieving Product-Market Fit

At the Product-Market Fit stage, you should be gathering data, diverging and iterating as much as possible, and identifying the right signals so that you can converge and focus on only a few critical things to get right for the next stage of Go-To-Market (GTM) Fit. This allows you to get to traction, which will then create momentum towards scaling.

See below image of the stages after PCF:

Figure 1: The stages of a go-to-market strategy

Because startups need to make a series of key decisions quickly to get to GTM Fit, those without a clear direction tend to spiral out of steam and get stuck in the chasm; this means they've achieved product-market fit but struggle to scale beyond that point.

Achieving Go-To-Market Fit

At the GTM phase, before scaling, you are still learning and iterating different things with different anchor points in both stages. This is the critical stage where not only do you have to leap "across the chasm", but you also have to validate that what you have designed is a commercially viable pricing offer, a potentially scalable and profitable business model and has the right market segments acquisition sequence and channels to reduce unnecessary burn. The design of the model or offer needs to address a few key gating criteria and show a pathway to profitability and scalability through segment acquisitions.

Because of needing to spin all these plates and to make a series of key decisions quickly to get to FIT; most meandering, "follower-type" startups without a clear direction tend to spiral out of steam here. This is the typical 'not enough business/momentum, therefore not enough money/investment, chasing after every prospect and having a lackluster response' death spiral.

Basically, getting stuck in the Chasm.

Therefore, at this stage, it is important to design a roadmap to get viral traction within a specific market segment and between segments as quickly as possible. As much as that is the target outcome, achieving it requires following a series of steps, in order for the "domino effect" to happen.

One key step, which may seem counterintuitive, is to converge and focus intensely on a particular niche or segment in order for your offer to have a sufficiently high impact. Instead, a lot of startups choose to go broad and work with everyone who is willing, keeping the same modus operandi as during the PCF stage. This can lead to confusion and inefficiency, with product requirements becoming disconnected from sales efforts and creating confusion within product teams.

Go-To-Segment Fit: Expansion via Leverage Model

As defined below, Go-To-Segment Fit is achieved when a startup's expansion into different market segments is strategically aligned and leveraged in a sequential manner that is optimised for virality, lowering customer acquisition costs and maximising the product development's return on investment.

Figure 2: A definition of Go-To-Segment Fit

This is uniquely relevant for a startup's go-to-market, instead of a matured product's go-to-market, because a startup's product or offer is still evolving and may be at different stages of development. There are always potential segments and customers with gaps to fill. In this context, there are always new segments and customers to explore, each with different needs, adoption mindsets, tolerance to buy, and purchasing behaviours. The only key resource a startup can't afford to lose is time. Prolonged indecision or missteps can result in significant cash burn and reduced likelihood of success. Therefore, expanding via a leveraged model is essential for startups to efficiently utilise their resources and maximise their chances of success in the market.

A leveraged expansion model looks like the image below, where you know what you can offer clearly for each segment, from a product perspective, that meet their requirements. Usually, the offer is an outcome/side-effect of engagements with the previous segments.

Figure 3: A visualisation of Expansion via Leveraged Model strategy

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